Crypto investing glossary

Every term you come across in Metena, explained simply. You don’t need to be an expert: the goal is that you understand what you read before you decide.

Last updated: October 2026

Chart of bitcoin's drawdown from 2017 to 2026: price on a logarithmic scale at the top, fall from the high at the bottom, with lows of −83% in December 2018, −77% in November 2022 and −53% in July 2021. — Maximum drawdownRead the entry

Your strategy

Thesis: Your reason for investing, written down: why you buy, over what horizon, and what has to happen for you to be right. A clear thesis stops you improvising when the market moves.
Constitution: In Metena, all your rules written in cold blood: thesis, action rules, invalidation conditions and capital management. You reread it the day sticking to it gets hard.
Invalidation condition: The precise fact that would prove your thesis wrong and trigger your exit, for example “I exit if BTC closes two weeks below $20,000”. Writing it in advance stops you rationalizing it later.
Health score: A number out of 100 that sums up the strength of your strategy, calculated from eight weighted pillars. It is read pillar by pillar. It is not a price forecast.
DCA (Dollar-Cost Averaging): Investing a fixed amount at regular intervals, for example every week, whatever the price. It smooths your entry price and stops you hunting for the “right moment”.
Rebalancing: Adjusting the portfolio to get back to the planned allocation when one holding has risen or fallen too far compared with the others.
Money management: Managing the size of your positions and your exposure: how much to risk per holding, what reserve to keep, which limits never to cross.
Stablecoin: A crypto-asset designed to hold a stable value, usually pegged to a currency such as the dollar. Often used as a reserve so you are not 100% invested.
Asset allocation: How your capital is split between several assets, expressed as target percentages.
Diversification: Spreading your capital across assets that do not react in the same way, so that a single decline does not take the whole portfolio with it.
Average cost (cost basis): The average price at which you bought an asset, fees included. Above that price, the position is in profit.
Stop-loss: A price level set in advance, below which you sell to limit the loss on a position.
Take-profit: A price level set in advance, at which you sell all or part of a winning position.

Backtest and risk

Backtest: Replaying a strategy on past data to measure what it would have delivered. Useful for testing rules, but the past does not predict the future.
Maximum drawdown: The largest fall, as a percentage, from a peak to the low that follows. It measures what you must be able to withstand without abandoning your strategy.
Sharpe ratio: Return relative to the volatility endured. The higher it is, the more the return was earned with moderate turbulence.
Volatility: The size of an asset’s price swings. High volatility means large moves, up as well as down.
Monte Carlo simulation: A method that generates thousands of possible paths from your rules, to see the range of outcomes instead of a single scenario. Each path is a possible future, not a forecast.
Percentile (p5, p95): The 5th percentile is the value below which 5% of simulated scenarios fall; the 95th is the value only 5% exceed. They bound the low and high scenarios.
Stress test: Simulating your rules through a historical shock, such as the March 2020 crash, the LUNA collapse or the FTX bankruptcy, to see what they would have absorbed.
Leverage: Borrowing to take a position larger than your capital. It amplifies gains and losses alike and can lead to the position being liquidated.
Correlation: A measure, between −1 and 1, of how far two assets tend to move in the same direction.
Risk/reward ratio: The ratio between what a position can lose you, down to the stop, and what it can gain you, up to the target.

Technical indicators

RSI: A momentum indicator between 0 and 100. Above 70 it is often called overbought; below 30, oversold. It is a reference point, never a buy signal on its own.
MACD: An indicator that compares two exponential moving averages to spot a change in trend. A bullish crossover suggests strengthening momentum.
Moving average (SMA, EMA): The average price over a given period: it smooths out noise and brings out the trend. The EMA gives more weight to recent prices.
Golden cross: A crossover where a short moving average (often 50 days) moves above a long one (often 200 days). Read as a sign of an uptrend, with some lag.
Bollinger Bands: An envelope drawn around a moving average, two standard deviations wide. It shows whether the price is unusually high or low given its recent volatility.
ATR (Average True Range): The average size of price moves over a period. It is used to gauge volatility and to set consistent risk levels.

Market and on-chain data

On-chain: Describes data read directly from the blockchain: active addresses, transfers, flows to exchanges. It shows a network’s real usage, not just its price.
Open interest: The total value of derivative contracts still open. Record open interest signals a lot of leverage in the market, so sudden moves are more likely.
Funding rate: A periodic payment between buyers and sellers on perpetual contracts. Strongly positive, it indicates leveraged buyers dominate and the market is stretched.
MVRV: The ratio between an asset’s market value and its realized value, meaning the price at which each unit last moved. A high value signals holders sitting on large unrealized gains.
BTC dominance: Bitcoin’s share of the total crypto market capitalization. When it rises, it is often at the expense of other cryptocurrencies.
Spot ETF: A listed fund that actually holds bitcoin or ether. Its net inflows and outflows serve as an indicator of institutional demand.
Fear & Greed: A sentiment index from 0 (extreme fear) to 100 (extreme greed) that combines several measures of market behavior.
Tokenomics: The economics of an asset: quantity issued, unlock schedule, distribution, uses. It sheds light on its long-term value.
MiCA: The European regulation on crypto-asset markets, which governs issuers and service providers. Good regulatory news improves the quality of a thesis, not the timing of an entry.

Reusing our charts

The charts in this glossary are published under a Creative Commons BY 4.0 licence. You may use them on a website, in an article or in a presentation, including for commercial purposes, provided you credit “Metena (metena.app)” with a link to the original page.

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Educational content. It is not investment advice. Crypto-assets carry a high risk that can go as far as the total loss of capital.